Acctg 131 Mod 1 Flashcards
This is a process of identifying,
recording and communicating economic
information that is useful in making
economic decisions.
Accounting
Art of recording, classifying and summarizing
After journalizing, the accountant then
classifies the effects of the event on the
“accounts.” This process is called?
Posting
The accountant recognizes (i.e.,
records) the “accountable events” he has
identified. This process is called?
Journalizing
Phases of Accounting
Recording
Classify
Summarizing
Interpreting
Accounting information is communicated to
interested users through accounting reports,
the most common form of which is the?
Financial Statements
Accounting provides information that helps a
business manager perform the following
management functions
- Planning
2.Organizing
3.Staffing
4.Directing
5.Controlling
Those who are not directly
involved in managing the business.
External Users
Examples:
* Existing and potential investors (e.g., stockholders
who are not directly involved in managing the
business)
* Lenders (e.g., banks) and Creditors (e.g.,
suppliers)
* Non-managerial employees
* Public
Those who are directly involved in
managing the business.
Internal Users
Examples:
* Business owners who are directly involved in
managing the business
* Board of directors
* Managerial personnel
This principle is the accounting principle
that requires that the expenses incurred during
a period be recorded in the same period in
which the related revenues are earned.
This principle recognizes that businesses must
incur expenses to earn revenues.
Matching
In 1494, the first systematic record keeping
dealing with the “double entry recording system”
was formulated by?
Fra Luca Pacioli
Also referred to as economic entity
The _____________ states that we
should always separately record the
transactions of a business and its owners.
Separate Entity Concept
Unless otherwise stated, the company will last
long enough to fulfill objectives and
commitments.
It assumes that during and beyond the next
fiscal period a company will complete its
current plans, use its existing assets and
continue to meet its financial obligations
Going Concern
A _________ is a measure of value used
in accounting in which the value of an asset on
the balance sheet is recorded at its
_________ when acquired by the company
Historical cost, Original cost
An accounting method where revenue or
expenses are recorded when a transaction
occurs rather than when payment is received
or made.
The method follows the matching principle,
which says that revenues and expenses
should be recognized in the same period.
Accrual Basis
This assumes that the value of the peso is stable
over time
Stable Monetary Unit
money is the common denominator
A company can divide its economic activities
into time periods.
Also states that a business should report their
financial statements appropriate to a
specific time period (accounting period).
Time/Periodicity Concept
The Accounting Equation
Assets = Liabilities + Equity
Equity Expands to Capital + (Income - Expenses)
